Alabama Real Estate Law Examination
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1. Which Alabama agency is responsible for regulating real estate
licensees in the state?
A. Alabama Housing Authority
B. Alabama Department of Commerce
C. Alabama Real Estate Commission
D. Alabama Association of Realtors
Correct Answer: C. Alabama Real Estate Commission
Rationale: The Alabama Real Estate Commission (AREC) is the state
agency responsible for licensing and regulating real estate brokers,
salespersons, and companies in Alabama. The commission enforces
state real estate laws, investigates complaints, and ensures that
licensees comply with professional standards.
, 2. A person who represents another in a real estate transaction is
known as a:
A. Vendor
B. Agent
C. Tenant
D. Mortgagee
Correct Answer: B. Agent
Rationale: An agent is a person authorized to act on behalf of another
person, known as the principal, in a real estate transaction. Real estate
licensees act as agents when representing buyers or sellers in
negotiations and contractual matters.
3. Which type of agency relationship allows a licensee to
represent both buyer and seller in the same transaction with
informed consent?
A. Universal agency
B. Single agency
C. Dual agency
D. Subagency
Correct Answer: C. Dual agency
Rationale: Dual agency occurs when a real estate licensee represents
both parties in the same transaction. Alabama law permits dual agency
only when both parties provide informed written consent. The agent
must remain neutral and avoid favoring one party over the other.
, 4. In Alabama, how long must a broker maintain transaction
records?
A. One year
B. Two years
C. Three years
D. Five years
Correct Answer: C. Three years
Rationale: Alabama law requires brokers to maintain records related
to real estate transactions for at least three years. These records
include contracts, trust account records, closing statements, and
correspondence relevant to transactions.
5. Earnest money is best defined as:
A. A brokerage commission
B. A security deposit for a rental property
C. Money showing a buyer’s serious intent to purchase
D. A down payment made at closing
Correct Answer: C. Money showing a buyer’s serious intent to
purchase
Rationale: Earnest money is a deposit provided by a buyer to
demonstrate good faith and serious intent to complete a real estate
transaction. The funds are usually held in escrow until closing or
contract termination.
6. Which of the following is considered a fiduciary duty owed by
an agent to a client?
Merged With Correct Solutions |
Already Graded A+ | 2026 Latest
Update!!!
1. Which Alabama agency is responsible for regulating real estate
licensees in the state?
A. Alabama Housing Authority
B. Alabama Department of Commerce
C. Alabama Real Estate Commission
D. Alabama Association of Realtors
Correct Answer: C. Alabama Real Estate Commission
Rationale: The Alabama Real Estate Commission (AREC) is the state
agency responsible for licensing and regulating real estate brokers,
salespersons, and companies in Alabama. The commission enforces
state real estate laws, investigates complaints, and ensures that
licensees comply with professional standards.
, 2. A person who represents another in a real estate transaction is
known as a:
A. Vendor
B. Agent
C. Tenant
D. Mortgagee
Correct Answer: B. Agent
Rationale: An agent is a person authorized to act on behalf of another
person, known as the principal, in a real estate transaction. Real estate
licensees act as agents when representing buyers or sellers in
negotiations and contractual matters.
3. Which type of agency relationship allows a licensee to
represent both buyer and seller in the same transaction with
informed consent?
A. Universal agency
B. Single agency
C. Dual agency
D. Subagency
Correct Answer: C. Dual agency
Rationale: Dual agency occurs when a real estate licensee represents
both parties in the same transaction. Alabama law permits dual agency
only when both parties provide informed written consent. The agent
must remain neutral and avoid favoring one party over the other.
, 4. In Alabama, how long must a broker maintain transaction
records?
A. One year
B. Two years
C. Three years
D. Five years
Correct Answer: C. Three years
Rationale: Alabama law requires brokers to maintain records related
to real estate transactions for at least three years. These records
include contracts, trust account records, closing statements, and
correspondence relevant to transactions.
5. Earnest money is best defined as:
A. A brokerage commission
B. A security deposit for a rental property
C. Money showing a buyer’s serious intent to purchase
D. A down payment made at closing
Correct Answer: C. Money showing a buyer’s serious intent to
purchase
Rationale: Earnest money is a deposit provided by a buyer to
demonstrate good faith and serious intent to complete a real estate
transaction. The funds are usually held in escrow until closing or
contract termination.
6. Which of the following is considered a fiduciary duty owed by
an agent to a client?
